Question

Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity based costing study. The Intern, in consultation with the owner, identified three major activities and then completed the first stage allocations of costs to the activity cost pools. The results appear below. Total Motivity Cost Pool Serving a party of dinero Serving a di Serving drinks notivity tonsure esot par les served Number of dire served Mamber of drinks ordered coat Total motllty 16,430 5,300 parties 164, 160 12.700 dinere 34,650 10.500 draka The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top- management salaries. Some costs, such as the cost of cleaning the lines that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant She knew that the total cost for the month (including organization sustaining costs) was $180,000 and that 12.000 diners had been served. Therefore, the average cost per diner was $15. Required: 182. According to the activity based costing system, what is the total cost and average cost per diner for serving each of the following parties of diners? (Round your intermediate calculations to 2 decimal places. Round your Total Cost final answers to 2 decimal places and your Average Cost final answers to 3 decimal places.) Total Cost Average Cost A party of four diners who order four drinks in total Aparty of two diners who do not onder any e Aperty of one diner who orders three din

Answer 1

First we need to calculate the cost per activity

Activity cost pool	Activity measure	Total cost	Total activity
Serving a part of diners	Number of parties served	$         16,430	5,300	$       3.10
Serving a diner	Number of diners served	$       104,140	12,700	$       8.20
Serving drinks	Number of drinks ordered	$         34,650	10,500	$       3.30
		$       155,220

		Per party	Per diner	Per drink	Total Cost
		3.10 per party	8.20 per diner	3.30 per drink
a	A party of four diners who order four drinks in total	$                                    3.10	$           32.80	$           13.20	$    49.10
b	A party of two diners who do not order any drinks	$                                    3.10	$           16.40	$                 -	$    19.50
c	A party of one diner who orders three drinks	$                                    3.10	$             8.20	$             9.90	$    21.20

		Per party	Per diner	Per drink	Total Cost	Number of diner	Average Cost
		3.10 per party	8.20 per diner	3.30 per drink
a	A party of four diners who order four drinks in total	$                                    3.10	$           32.80	$           13.20	$    49.10	4	$   12.28	per diner
b	A party of two diners who do not order any drinks	$                                    3.10	$           16.40	$                 -	$    19.50	2	$      9.75	per diner
c	A party of one diner who orders three drinks	$                                    3.10	$             8.20	$             9.90	$    21.20	1	$   21.20	per diner